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ALl_ complete_LIDL STRATEGIC V4

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John Barlow

on 18 August 2016

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Transcript of ALl_ complete_LIDL STRATEGIC V4

LIDL STRATEGIC
ANALYSIS

Buying
Logistics
Logistics
Merchandising
(inc. future store)

Merchandising
(inc. future store)

Property
Services
(QA/CR/CS)

Store Operations
Personnel
(inc. organisational
structures)

Personnel
(inc. organisational
structures)

Company Structure
Company Structure
Lidl Group Executive Management
(since March 2015, reports to management board)
Alexander Sonnenmoser (IT)
Christoph Pohl (Procurement)
Heiko Hegwein (Lidl digital)
Robin Goudsblom (Goods)
Jurgen Achenbach (International Marketing)

New:
Category Management Department within procurement
Alexander Lauer, Commenced Lidl 1st of April 2016
Joined from Ferrero to head up new Category Management department
Pioneered ‘Shopper Marketing’ and ‘Total Store Principle’ of category management at Ferrero
Goal to operationalise strategic direction
Knowledge to be shared with international subsidiaries

New:
Digital Marketing team, goal to explore digital opportunities for Lidl

Lidl National Head Office Organogram (UK)
Lidl Head Office Organogram- Buying
Lidl Regional Distribution Centre Organogram (UK)
Key Personnel
Kaufland CEO Frank Lehmann (left), Schwarz Group CEO Klaus Gehrig (middle), Lidl CEO Sven Seidel (right)
Sven Seidel Biography
Christine Rittner Biography
Jesper Hojer Biography
2.2.5 – Alexander Sonnenmoser Biography
Lidl International Management changes
Culture
Sven Seidel Vision
Lidl wants to be No 1 employer of choice over Google, Apple and Amazon

Lidl wants to be perceived as a good employer

Sven continues to recount how he has collaborated with the newly created team (HR) to break down hierarchical sub-structures within the company since the day he took office. The company is to become faster and more direct, enabled to better react to the major challenges of the market






Fear as a management tool? That was in the past.

At Lidl, responsibility will now be delegated – as well as trust
Five Leadership Principles
Managers are to act as ‘player coaches’ instead of leading from the side-lines, employing clear and fair communication.

We place confidence in our employees and trust that they will complete all tasks to the best of their ability, and that they will develop ideas and suggestions that will benefit our business.

We are open to changes and challenges with the aim of developing and continuously improving our business.






Together with Lidl personnel manager
Christine Rittner
, Seidel formulated five leadership principles that are to elevate cooperation at Lidl to a new level.
We enable our employees to work effectively and successfully for our business and we support our employees’ development.

We honour our agreements with our employees as a trustworthy partner.

Sven Seidel General Interests
Reportedly enjoys attending wine festivals in Switzerland
Reportedly enjoys playing golf
He loves watching football
His name is associated with the Lean-retail concept
He takes pride in how he has collaborated with the newly created team to break down hierarchical sub-structures within the company since the day he took office.
Mad about Fußball
The Clean Clothes Campaign (CCC) is the textile industry’s largest alliance of unions and NGO’s. The CCC was founded in 1989 and has lobbied companies and governments extensively to offer direct solidarity support to textile workers as they fight for their rights and demand better working conditions.

The CCC is an alliance of organisations in 16 European countries and have a partner network of more than 200 organisations and unions in garment-producing countries to identify local problems and objectives. They co-operate extensively with similar labour rights campaigns in the United States, Canada, and Australia

CCC has produced company profiles for many key retailers including Lidl & Aldi

The difference in scores is a reflection of the difference in buying process

All textile products at Lidl are internationally co-bought, with all national Buyers invited to Asia x4 times per annum

In addition to greater visibility of the manufacturing base, Lidl have established a consolidated supply base for their business with the benefit of greatly enhanced economies of scale

This is supported with Lidl’s flagship Supplier Qualification Programme” (SQP) that it is running in Bangladesh in partnership with GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit or the ‘German corporation for international cooperation’).

SQP current phase involves eight factories with more than 26 000 employees

Lidl has been working to improve wages through two methods: firstly, by ensuring overtime is properly paid and that workers are correctly classified for the work they do. Secondly in Bangladesh, Lidl commissioned GIZ to organise the payment of direct bonuses to workers in one supplier firm in recognition of their quality work

This payment amounts to more than a month salary per cash disbursement in addition to the normal monthly wage paid by the factory
Buying Process
Fish Buying Policy





The current fish buying policy is under review. Conversations with buyers and suppliers raised doubts about market availability as of 1 January 2018 for all aquaculture products to be certified only by the EU organic or the ASC standard. Therefore, CR Germany is discussing the possibility of accepting GlobalGAP in addition to the ASC and EU organic standard.
Discussions have been held with appropriate buyers as well as with ALDI North. CR Germany aims to work towards a final policy wording for approval by the end of June. However, this may also require longer. 
Germany is converting products to UTZ-certified tea, however, without drafting a policy or communicating a specific goal for tea. The reason for this is the lack of public interest in this area. 
Tea Buying Policy
Current status at ALDI SOUTH Germany:
Buying Process
Buying Process
Examining the data from ComRes, it is clear that more visible supplier relationships does represent an opportunity for both Lidl and Aldi
Which is supported by the evidence that when asked which were the most important values held by a supermarket, treating suppliers fairly is the most important value to U.K consumers, even above employee wellbeing
Accreditations
As part of Lidl’s sponsorship of the English FA, football sessions are offered run by professional coached to help develop young peoples technique as well as fitness and social skills

Lidl has invested in professional coaches for clubs, new equipment and facilities

Lidl ‘Oaklands’ brand is now official supplier of fruit and veg to the England team, as ‘Carrick Glenn’ is now the official water
Very similar position with the sponsorship of the Scottish FA

Lidl has invested in 300 skills centres across Scotland to help nurture future talent

Specific ‘Strathvale Farm’ brand as official supplier of meat and poultry




Sponsorship of Welsh FA based around ‘play more football’ campaign

Based in schools around a ‘turn up and play’ environment

‘Birchwood Farm’ official meat & poultry supplier



Sponsors
Sponsors
In addition to the sponsorship of each Football Association Lidl organised ‘Football Zones’ at various different events and City Centres in 2016
As well as hosting FA coaches providing skills sessions through various different interactive formats, there are opportunities to win up to £100 free shops and autographed national team shirts
Sponsors
Lidl’s two principle charity partners are ‘CLIC Sargent’ – supporting young people suffering cancer and ‘Keep Britain Tidy’ which engages with the public on reducing waste and litter in the environment

Funds for these partners come from a proportion of the 5p levy on single use plastic bags brought into the England (the rest of the U.K had already implemented the charge) on the 5th of October 2015.

Lidl have committed to donating £500,000 to each partner over a 12 month period

Ireland
Barretstown

A three year partnership which has now been extended


Barretstown offers free, specially designed camps and programmes for children and their families living with a serious illness – supported behind the scenes by 24 hour on site medical and nursing care.

So far over €1million has been raised

The majority of money was raised through employee led initiatives – Employees become ‘Barretstown Buddies’ and organise fundraising

The Barretstown Partnership is advertised regularly – in leaflets and brochures, online and instore

Collection boxes sit in store to allow customers to donate while shopping

Ireland
LGFA (Ladies Gaelic Football) A three year sponsorship worth over €1.5 million in the first year alone

This sponsorship has had heavy media support – both through Lidl’s advertising and in newspapers and TV across the country

Lidl have advertised this sponsorship in their leaflets, on TV, online and with POS ad OOH signage, there is also a box instore for customers to nominate a local LGFA club for support

This campaign has been run on the line of Serious Support for Women’s Sports, starting with a spoof ‘Ladyball’ ad







Northern Ireland
HYAs – Heroes of Youth Awards Northern Ireland
Lidl sponsored the first set of awards last year and are sponsoring them again this year
Lidl have a named award

The Balmoral Show
Lidl sponsored The Annual Balmoral Show in Northern Ireland
They use this as a chance to showcase their commitment to Northern Irish suppliers
Lidl sponsor the show and attend it with a ‘Green Bard’ stand

Lidl Northern Ireland Community Works
Similar to Tescos ‘Blue Token’ campaign last year Lidl asked the public in Northern Ireland to nominate local charities and voluntary groups in their area
Lidl donated over £250,000 in money and products to the chosen community groups
A ‘Lidl Community Team’ visited every group to donate to them in person
There were many tie-in events such as in-store sampling and visits to charities that were nominated but not chosen
This initiative was covered over a series of weeks in the Lidl leaflet
The same nomination process is being carried out for 2016



Within Northern Ireland Lidl has adopted a mixed approach of U.K initiatives such as partnership with CLIC Sargent however there are a number of activities unique to this market

Energy
In addition new RDC’s fitted with refrigeration heat reclaim and solar panels
Ground exchange heat pumps now installed under the carparks where possible using an estimated 8,000m³ less gas as a result
New U.K head office in Tolworth London to be built to BREEAM excellent standard, which will be within the top 10% of non residential property in the U.K
Strategy
Over the last 12 months, Lidl have significantly upped their media activity on CR with increased press releases and bold commitments published including:

Commitment to sustainably-sourced bananas by the end of 2016 (ahead of Aldi)-

Paying the Living Wage (ahead of Aldi)

Partnership with Keep Britain Tidy on carrier bags

MSC-certified lobster for Christmas

This may well be as a result of Daniella Tulip moving from role as PR Director to CSR Director on her return from maternity
Activity
Lidl are keen to use the exterior of their stores to convey key messages on 48 sheets

Recently this has been dominated by CR messages either in regards to products (with a large emphasis on provenance) or community messages with emphasis on the strategic partners
Activity
This is continued within the store leaflets, where CR messages often take prominent positions on front or rear covers or even double page spreads
Services – CSD
Lidl customer services is based within the Livingston RDC in Scotland.

Staff given 6-12 month fixed term contracts earning £9.00 per hour gross pay. This does include standard Lidl benefits package of 30 days paid holiday and 10% staff discount card
New hire attrition rates within the industry are demonstrably influenced by starting salaries
Housing and manufacturing have the highest average salaries with retail and distribution amongst the lowest
Service
In order to speak to Lidl customer services there is an initial recorded message lasting 16 seconds

Followed by a secondary message after 45 seconds should no contact be made

UK Set up
Research by Aldi CSD involved telephoning Lidl CSD 200 times to establish an average call waiting time. This pilot study showed that on average callers waited just over 30 seconds before a person answered the phone

Mean cost per inbound call in the U.K is £3.55 across all industries*

Agents within retail, manufacturing and distribution now spend over 15% of time handling emails and web chat*

Web
A clear advantage of the Lidl site is easy access to product videos and a back catalogue of all product manuals which are downloadable form the site in multiple languages

As NFS enquiries make up a significant proportion of calls to the Aldi customer service line, this could be a source of increased efficiency for Lidl as many of these enquiries are diverted

Web
Web
Aldi however do allow customers to post photos which can lead to customers posting unfortunate incidents like the one seen adjacent where a vacuum pack has had a seal burst
Within the realms of social media Lidl do not allow customers to post photographs to a ‘wall’ which makes the comments far less obvious to visitors and reduces the volume of ‘re-posting’














Particularly popular in the U.K are any stories generated from potentially dangerous arachnids found in fruit bought in stores, issues such as this one featuring a false widow spider found in a pack of grapes generate a large volume of ‘re-posting’
Customer journey aided in Lidl with clear signage & POS from arriving in car-park to store exit
Consistent signage on exit and entry inviting customers to contact Lidl via social media platforms as well as customer services telephone number
Stores
In store instant feedback with push button system collating broad responses across 4 options

Currently Aldi CSD collate feedback from customers on Excel spreadsheet and share monthly with Corporate Buying and Regions

Opportunity exists to process and codify data in a manner to allow quick dissemination of key information to relevant department
Services – QA

QA Structures
Recent additions to the Ger based QA team include:

U.K based quality manager (possibly in light of a number of RFS products)

Addition of print specialists to manage designated printers & ensure consistency of product packaging
Expansion of activity in Asia with focus on source testing for hard goods and textiles

Currently (14.08.16) 34 positions available in Asia under ‘merchandising’. These range from ‘sourcing assistant’ to ‘assistant merchandiser’ . These positions manage the end to end supply chain, working closely with QA & Logistics to provide support for the buyers

Currently (14.08.16) 28 positions available in Asia under ‘Quality’. From ‘technologists’ to ‘senior consultants’ the positions involve source testing products to meet specifications, along with factory visits and inspections
TSP's
Lidl has seen a significant increase to source inspections and testing of both products and facilities following increased media interest in working conditions, particularly within textiles originating from Bangladesh
The listeria scandal which occurred in 2012 however was not resolved until 2013 saw Lidl fined €1.5m and suffered considerable bad press in Austria and the rest of Europe with one customer dying as a result of the contamination. Lidl now have a policy of ensuring all own label is tested with Lidl’s TSP’s – possibly as a result
An ongoing issue for Lidl U.K where internationally sourced products have incorrect labelling for the U.K market, often as a result of ingredients not listed in English

To date (14.08) in 2016 Lidl has issued 10 separate product recalls (compared to 3 Aldi U.K) across 14 SKU’s in the U.K & IRE. This ongoing issue could well be influencing the requirement for a U.K based QA team
Company Structure
The structure deliberately avoids transparency and potential takeovers
Lidl Head Office Organogram - Buying Department
Property Practices
Within the last two years there has been a significant shift in Lidl’s property strategy, summarised as follows;

Significant change to the standard Lidl design store.
Site size up to 2.5 acres
Store size to 28,000 sq ft (2,600 square metres)
Car parking to 100 plus spaces
Significant internal retailing changes (including in house bakery)   

Review of existing estate in order to modernise the retail offer at each location.
Knock down and rebuild to latest standard (or)
Extensive refurbishment  

Significant increase in the value that Lidl are prepared to pay for freehold sites (often significantly above Aldi)

Significant increase in the value that Lidl are prepared to pay for leasehold sites in London (not seen outside M25).

Variants in Process to Aldi
Acquisition
 
Lidl are currently more aggressive with freehold acquisition prices, routinely offering in excess of £3m for sites regardless of town strength
Lidl appear to be less inclined to accept a leasehold contract than Aldi
Property Department Structure
 
A UK Property Director (UK Main Board) oversees all property matters and reports directly to the UK MD
Regional Property Directors (estimated at 3 no.) report to the UK Property Director and provide line management to the Regional Head of Property. They also hold other responsibilities (e.g. RDC site acquisition and construction)
Regional Property Managers oversee the regional acquisition and construction program
Acquisition Managers (up to 3 no. per Region) report to the Regional Property Manager and are responsible for site finding, acquisition and planning (see separate overview)
Construction
 
Lidl construct stores through Main Contracting
The Lidl Construction Manager plays an important role in ensuring the delivery of the standard store specification
Lidl engage with UK Main Contractors but have also brought over favored Main Contractors from Germany
Regional Store Openings / Rebuilds
Republic of Ireland Recent Store Openings
Regional Store Openings / Rebuilds
Republic of Ireland Recent Store Openings
Heat Maps
Heat Map of Lidl UK store openings up to 20/05/2019.

Lidl are focusing on the Greater London area and having a greater presence in the Yorkshire / Humberside area.
Heat Map of Lidl UK store openings by region up to 20/05/2019.
Lidl Store Summary
Regional Distribution Centres
National Requirements
Lidl are considering a move for 16 UK Netto sites. Lidl are assessing the suitability of the sites with a confirmed closing date on applications being Friday 5th August.
National Requirements Overview
Hersham GA Plan
Lidl are becoming more innovative with their development. They are currently proposing a new mixed-use development at the Riverdene Business Park site, Molesey Road, Hersham.
Proposed Development:

Provision of a 1,407m² store.
91 free retail parking spaces including 6 disabled and 4 parent & child bays
38 residential apartments including a mix of 1,2 and 3 bed units. 

Hersham Site
The site is accessed on the eastern side of Molesey Road and the rear of the property bounds the western side of Mole Road.

The surrounding built environment varies in terms of land use, building design and materials. Residential properties are situated along Mole Road (east), Thrupps Avenue (south) and Molesey Road (west). A petrol filling station and commercial buildings back onto the north of the site.

Riverdene Business Park is designate as strategic employment land and comprises a mix of single and two storey light industrial properties with associated car parking. Some of the units are currently occupied whilst some are vacant.
Head Office - Wimbledon
Lidl UK GmbH 19 Worple Road Wimbledon London SW19 4JS
Head Office - Dublin
Lidl Ireland GmbH Main Road Tallaght, Dublin 24

Approximately 8,000 sq m.

4 storey basement building fully fitted out with offices, meeting rooms and all associated facilities.
Lidl have made a change in design for Dublin Head Office, this is open plan and includes a communal work space which is paper-free. The site includes a staff canteen, on-site gym, a terrace garden and has coffee stations on each floor.
Head Office (New) - Tolworth
Lidl have confirmed they will build a new, larger Head Office in Tolworth, South London.
220,000ft building on a five-acre site
Close to Tolworth train station and A3
Housing more than 750 employees
Expected move – 2018
Creating more than 500 new jobs

Lidl will pay the local authority £2,100,000 per acre for the land.

The site has been designed to achieve BREEAM Excellent standard. BREEAM Excellent standard is the Top 10% of UK new non-domestic buildings (best practice)
Lidl have been working with Moser Associates who completed a mapping exercise for Lidl to determine the design based on interaction between departments. This has resulted in the office design being open planned.

Lidl Concept Design & Masterplan;
Fitness Centre & Changing Area (2 floors)
Central Atrium
Open Plan offices
Coffee Bar
Staff Canteen
Roof Terrace
“Green Corridor” – electric car parking spaces
Site Plan - Proposed
Central Atrium
Views from the 2nd floor link bridge looking out onto the Central Atrium. The Atrium not only acts as a communal and corporate display space but it also acts as the vertical link between office floor and sits centrally on the horizontal linked axis.
Main Entrance
View from the main Kingston Road reception
Central Atrium
Views from the 2nd floor link bridge looking out onto the Central Atrium. The Atrium not only acts as a communal and corporate display space but it also acts as the vertical link between office floor and sits centrally on the horizontal linked axis.
Central Atrium
Views from the 1st floor within the Central Atrium. Containing break out space for informal meetings, social gatherings and corporate events.
Lidl announced plans to enter the US market in 2015

$77 million investment for a new corporate HQ in Arlington, VA.
$125 million investment in Spotsylvania County distribution centre
$100 million investment in Maryland distribution centre, 800,000-square-foot facility
Opening 100 stores in 2018
Stores will be approximately 36,000 square feet

USA Developments
Lidl Spotsylvania RDC - 6110 Smith Station Rd, Fredericksburg, VA 22407, USA
Head Office - Wimbledon
Lidl UK GmbH 19 Worple Road Wimbledon London SW19 4JS
Other Developments
Lidl Poland (Lidl HQ)
LIDL’s new headquarters in Jankowice, in the suburbs of Poznań, required a new restaurant which would reflect the firm’s philosophy and provide a comfortable space for their employees.

Raw wood, colourful signage and tiles dominate the space and reference the atmosphere of traditional markets. Different decorative logos reference the LIDL brand.

The architects divided the restaurant into different zones with varying seating arrangements and introduced green accents to augment the natural feel and warmth of the space.



Lidl has recently introduced a trial of background music. Research shows quiet music not only relaxes customers, but also improves their well-being and affects the perception of time.

This can increase the dwell time in stores which can lead to increased basket sizes and spend.  

Potentially first developments following the creation of the Category Management team under Alexander Lauer






Audits conducted at both Aldi and Lidl stores, where both businesses are located within 500m of each other. 2 store combinations per UK & IRE regions were selected. The mystery shopper reports were conducted by Inside Tracks for the UK & Customer Perceptions for IRE. All audits were conducted at busy trading periods over a weekend. Aldi and Lidl stores were audited within 1 hour of each other
Summary of Results
In Store Availability – Lidl vs Aldi
The trends would appear to be repeated in Ireland where the number of off-sales are lower at Aldi than Lidl however the standards in store are stronger within Lidl
In Store Availability – Lidl vs Aldi Ireland
Summary of Results
Using Aldi’s weekly PCR reports, a study was undertaken to examine how quickly and to what extent Lidl UK reacts to price changes.
130 Price changes (decreases) were authorised between the 27th June and 18th July 2016 for core range lines, from 1 day after implementation x2 Lidl control stores (1 North & 1 South) were audited to check for any reaction
Summary of Results
Retail Price Changes
Lidl did NOT react to 106 (81%) of Aldi price changes within the 2 week monitoring period
Lidl increased the price of 6 products within 1-5 days of an Aldi price decrease, x4 Produce lines, x1 chill & x1 ambient
Lidl lowered the price, but did not match Aldi on 3 produce lines within 3 days, French Brasserie Lager within 7 days, Diced Beef within 1 day
Lidl Matched Aldi on 13 lines within 9 days. 9 were produce lines within 3 days, 2 cleaning products within 3 days, and clear set honey within 10 days
Key Findings
Within Produce and fresh meat, Lidl appear to change prices regularly and react quickly to Aldi. There is no obvious correlation to Lidl reacting to super 6 promotions, and many Aldi changes are ignored, indicating they have their own separate pricing strategy, as supported by the Kantar data
They are not reacting quickly (less than one week) to general grocery price changes that Aldi authorise, suggesting they periodically use information such as Brand view to check and adjust prices
Cleaning products had the fastest reactive price changes outside of produce and fresh meat
General Information
Launched on Mondays and Thursdays in stores

Fixed maximum number of products on sale, varies country by country however this is generally between 28-30 SKU’s spread across 2-3 themes maximum

Lidl NFS buyer’s dominant KPI is achieving 70% sell though after 1 week, this also includes an ideal of 30% after 1 day

Current business strategy is to increase volumes rather than SKU count

Buyer is responsible for lifecycle of products – therefore the buyer makes decision on removing stock from stores to be sent to national re-work centre

The bulletin is usually sent after 4 weeks on sale to inform over each product however buyer can remove product as little as one week after OSD if they deem necessary

U.K has a dedicated rework D.C in Walsall, IRE the function is carried out within the Mullingar RDC

NFS
Lidl Walsall rework D.C, all staff are agency employed, site is a basic single temperature building
General Information
Once in the rework D.C buyer decides whether product is either; disposed of, reduced for grand openings or re-palletised for a future OSD (up to a maximum of twice)

Buyer controls a national budget for reductions therefore has to balance quantities brought into regions vs reductions both in store or from rework centre

Each country decides on preferred lifecycle of a product before they are removed from sale – e.g. U.K 35 days, ITA 42 days

Generally textiles are not selected for sending to rework D.C, these are reduced or disposed in store

Each store has a set day to return pallets of NFS to RDC to be forwarded to rework D.C

Errors in counting from store to RDC then RDC to rework D.C are constant cause for inventory queries within sales department (store ops)

Any food special reductions have to be discussed with sales department (store operations) due to date sensitivity. Food special buyer still has responsibility for overall budget
Lidl NFS
In Store Merchandising
In Store Merchandising
x48 core range products are merchandised on ‘D’ pallets
x2 core range paper products merchandised on Euro pallets
White pallet or nested ‘D’ pallets used for gondola end promotions
‘Spot Buy’ promotions are offered to National NFS Buyer from I.B or can be sourced independantly. Supplier is responsible for the FSDU

These are usually relevant NFS to be displayed in front of tills or near NFS

Promotions on the cross aisles tend to be branded food goods sourced by the ambient food buyers

All NFS have individual EAN numbers allowing easy tracking of sales of all variants (colours, sizes etc.) this aids the NFS buyers adjust orders for faster selling variants

POS displays OSD which relocates in the store each week, until reduction/return or disposal
In store pallet merchandising
Lidl would appear to be flexible with their merchandising, so that they are able to protect availability certain SKU’s at key times – for instance ice cubes within end-cap freezers

Lidl do not appear to suffer from the same operational issue as Aldi for exterior merchandising, allowing items such as compost to be sold all year
Lidl Regional Distribution Centre Organogram (UK)
Store Equipment
Customer scales available in store for loose produce, currently cherries available in U.K & IRE
Lower height / collapsible merchandising tables for NFS which are height adjustable to allow for different sizes of product
The bespoke POS which acts as a ‘category header’ directing customers to different themes is easily transferable by lifting from the table

The headers themselves are between x2 sheets of laminated plastic to protect from damage and allow easy cleaning
Range
Fish and shellfish products: In contrast to Lidl, neither ALDI North nor ALDI SOUTH have currently defined quantitative goals.

Animal welfare: None of the three companies have defined a quantitative goal.
Cocoa: Goals are identical.

Tea: To date, only Lidl has defined a quantitative goal.
Lidl have to date endorsed 18 of the U.K governments responsibility deal pledges as part of the government's Public Health Responsibility Deal, launched in March 2011. The aim of this voluntary partnership is for businesses and influential organisations to work collaboratively to improve public health by creating the right environment for people to make informed choices that lead to healthier lives

Lidl were the first U.K supermarket to announce ‘healthy tills’ generating significant levels of PR
Pledges
Range
Coffee: To date, only Lidl has published a quantitative goal. Lidl does not accept 4C as a sustainability standard. Aldi has developed a goal, however, compared to LIDL this goal is less specific as there is currently no timeline specified for its achievement. ALDI North plans to set the same goal as ALDI SOUTH.
Palm oil: It is difficult to compare the goals. Compared to ALDI North/ALDI SOUTH, LIDL has chosen to set itself longer timelines for the transition to sustainable palm oil. However, LIDL is planning to source at least 50% segregated palm oil from RSPO-certified cultivation for food products. In contrast, ALDI North and ALDI SOUTH also accept, for example, RSPO Mass Balance-certified palm oil.
CR Germany is increasing the amount of segregated palm oil contained in food products and investigations are being conducted on whether to push this matter further with food suppliers. However, a public statement regarding the conversion to 100% segregated palm oil is not currently in discussion.
Coffee Buying Policy
CR Germany is continuously reviewing the coffee goal and working on the topic, but a commitment regarding a timeline is not on the near horizon. 
Palm Oil Buying Policy
Accreditations
On the 9th of June 2016 Lidl announced it’s win of the MSC mid size store of the year award
This was announced amongst other places on the new ‘My Lidl’ section of the revamped U.K website
Various different discussion boards are available with more active members rewarded with ‘exclusive benefits’
Lidl have signed up to the NFU ‘Fruit and Veg Pledge’ aiming to treat all suppliers fairly whilst building long term relationships with growers

Lidl are committed to Red Tractor sourced British fresh meat and poultry however no specific statement has been made to the exact percentage
Cross Care Food Bank and Bia Food
Food saving initiatives like FoodCloud

Lidl have partnered Cross Care since 2013 and have partnered Bia Food since January of this year

Food is sent by the charities to low income families and community cafes

Pride of Ireland Awards
Lidl have sponsored the Pride of Ireland Awards since 2014

Lidl sponsor one specific award themselves – Lidl’s Local Hero

This is advertised in leaflets, online and on store POS

Woman’s Way Mother of the Year Awards
Lidl sponsor this award every year
It is advertised in leaflets and occasionally on POS

Packaging
Many of the recycling and waste initiatives are trialled in Switzerland
Courtauld agreement 2015 – a voluntary agreement amongst U.K food organisations to;
Cut food and drink waste by 20%
Cut to greenhouse gas intensity in food and drink consumed in the U.K by 20%
A reduction in water use in food and drink manufacture
Service
Aldi have a very easy to navigate search function which aids solving customer queries
Web
Aldi have a very easy to navigate search function which aids solving customer queries
Performance Summary
Lidl overtook Aldi’s market leading year on year growth position in October 2015
This has since recovered in the latest 12 w/e data
Switching
Over the period where Lidl’s growth was larger than Aldi, switching losses to Lidl are experienced.
These switches are greater than expected, and reflect the risk of an ever closer approaching competitive threat to Aldi’s market position as Lidl continue to reform.
There are also smaller than expected switching gains from other retailers, which should be monitored.
Lidl Buying Approach - Overview
What do we already know about how Lidl buy compared to Aldi?
Lidl Buying Process Analysis
Lidl have a clear strategy of replicating Aldi’s range and utilising Aldi’s supply base. This allows them to take advantage of Aldi’s development work and trials, after which they usually launch a very similar product.
Lidl Buying Process Analysis
Lidl will continue to replicate Aldi's range, and as their buying department grows in the UK, they may strategically start to look ahead of us and begin to replicate the rest of the market before we do. One opportunity to defend against this is to be more agile and secretive in launching critical NPD. There is a potential to significantly reduce Aldi's critical path to enable this to happen where necessary.

Competitive Benefits

Allows Aldi to accelerate away from Lidl
Enables Aldi to quickly create the right range at key seasonal occasions
Encourages more switching from the other retailers to Aldi rather than Lidl, growing Aldi's share
Drives engagement with key suppliers through a progressive NPD programme
Consideration Points

This critical path is suitable for chilled foods, one of the categories in which both Aldi and Lidl are seeing most success. A solution would need to be found for other categories
It should be used for critical launches only
Store operational constraints would need to be overcome
This process has been developed by a chilled foods supplier, and relies on a commitment from TSPs to be able to reduce timescales of work, and buyers to accept existing factory raw materials to allow shelf life and nutritional testing to be completed quickly.
Standard Aldi Critical Path - 18 Weeks
Fastest Retailer - 12 Weeks (Tesco)
4 Week Fast Track
Lidl Buying Process Analysis
Product Launch
Below compares the critical path timelines in detail, showing where adjustments could be made to allow improvements.
International Buying – Non Food Specials
Each country has one Buying Director for Non Food Specials, and all are bought centrally in Germany.

Lidl use a buying entity similar to Aldi's Asian office, for sourcing from the Far East.

BDs from all countries meet 4 times a year to select products and place orders. Each country is responsible for meeting their turnover plan and will order accordingly.

Each country is responsible for deciding how long they want to have a product on sale for, and the target sell through rate after 1 week.

Any products left in stores can be recalled back to warehouse to be resold with a later promotion. This is controlled by the BD.

BDs have responsibility for all price change.
NFS account for approximately 13.5% of store turnover

Lidl has a strategy of favouring volume of orders over number of lines, adding to their commercial strength

The BD measures success on managing forecasted vs actual turnover and achieving week 1 sell through target of 70% (country dependent).

Based on the knowledge and expertise of Aldi's Buying Department and the findings of consumer research, we can be confident that Lidl are not finding their successes through having better quality products. However, the statistics show some figures to be cautious of.p
Product Quality
Aldi’s peak in innovation registers through 2015 with the launch of the 150 line trial. This potentially correlates with a stabilising in the decline of growth. Lidl show a peak in innovation in late 2015 to early 2016, correlating with the acceleration in their growth. This was also a period of continued vouchering from Lidl, and their first to market Christmas advertising campaign, reflecting a well co-ordinated attack. The impact of innovation is, however, short-lived.
Range Development - Innovation
Levels of innovation are monitored by Kantar, who record sales from existing product (no changes made), Existing Product Development, and New Product Development. The below chart compares Aldi and Lidl’s sales from innovation, by tier, over the past 52 Weeks. It appears Lidl have had a significant focus on Premium tier innovation, whereas standard tier is stable and consistent. Lidl have made strong % contribution progress in value tier NPD because of their low starting point. In contrast, whilst Aldi lead in total % sales from innovation, this is driven by standard tier, the largest segment of the market.

Range Development - Tiering
Premium own label is a crucial focus in all retailers – nobody is seeing decline in this area. Lidl are focusing heavily on this with almost 50% of premium own label sales coming from NPD – completely new products in the past 12 months. In contrast, Aldi at present has a similar proportion of premium OL sales coming from NPD as EPD- changes to products which have been in the range for at least 12 months. Whilst it is difficult to separate out the exact impact of this measure, it is visible in store that Lidl have focused on their Deluxe brand.
Range Development – Premium Own Label
Range Development – Value Own Label
Innovation in value tier in Lidl is also high, as the range is reasonably new and small. At present there are approximately 28 lines in the Simply range, across various categories, therefore a small amount of range development will have a greater impact on the % contribution towards spend. Whilst the contribution of innovation to the spend on value tier is currently more significant in Lidl than in Aldi, value tier is the smallest tier by value (0.4% of spend in Lidl and 3.1% of spend in Aldi). Standard tier accounts for the greatest share of spend and therefore will have the greatest impact on business performance.
Range Development – Brands
Lidl have a stronger branded presence and as a result lead in terms of their branded product contribution to sales at 11.5% (158 lines, 6.6% of total lines), vs Aldi at 8.2% (122 lines, 4.3% of total lines). However their focus seems to be shifting away from branded NPD, whereas this has increased more recently in Aldi. This is a point to consider when making specific buying decisions, however the overall contribution of branded innovation to sales remains small for both retailers at up to 15% of branded sales over the past 3 years.
Lidl list locally sourced products for specific markets in key categories:
Fresh meat and Irish breakfast meats
Produce
Eggs
Bakery
Range Development – IRE/NI
Little difference is found between the UK/IRE/NI ranges in ambient grocery, frozen or chilled foods. Where it is less viable to source a local product, for instance fresh turkey, they do not state the origin on front of pack. Several products, including fresh meat, have the ‘produced in Ireland’ logo, but are from Northern Ireland.
Range Development – Summary
Range development is one of several factors at play that will have contributed to patterns of growth over time. However, Lidl are significantly improving their customer perception of range closely behind Aldi, and are clearly closing the gap by having an ever closer range to Aldi. There still remains a significant gap to the big 4. How and to what extent we would seek to close this gap is a point for consideration if we are to continue to take share from them and remain ahead of Lidl. Aldi have a tendency to focus on the existing range over NPD. We should aim not to step back in EPD as this overtrade drives Aldi's total share, however balance this out with further focus on NPD, targeting premium own label as a key driver, to make incremental gains.
At the point where Lidl were ahead in growth and there was a net loss in switching to Lidl, we were experiencing switching losses in 2 key categories, Fresh Meat and Chilled Foods. We were experiencing gains in wine, but much less in Fruit & Vegetables.
In the latest 12 w/e data, the second consecutive period of growth ahead of Lidl, the 3 key categories of Fresh Meat, Chilled Foods and Fruit & Vegetables are the top 3 categories of switching gain from Lidl, showing how instrumental they are to total business performance.
Buying Strategy: How strategic are Lidl?
Strategic Category Management–Switching
Potential switching losses to Lidl are a risk, but several factors are involved in the long term performance of the Aldi business.
The insight and direction provided by the Category team shows that we need to consider taking a strategic category management approach to maximising sales and profit.
Analysis shows, as previously presented, that Frequency is the key metric to Aldi's future growth, with basket size reaching it’s peak, penetration slowing, and price deflation.
We are also seeing the proportion of Aldi customers who also shop with Lidl increasing whereas the proportion shopping in many other retailers is flat or decreasing.
Strategic Category Management - Roles
Categories where both Aldi and Lidl are showing strongest growth and overtrade are the Destination areas which are price sensitive, and lower in customer loyalty than the store average. This presents a risk of greater switching as Lidl continue to grow, but crucially an opportunity to capture further switching gains from lower loyalty shoppers of our competition. These are the categories which will drive frequency.
Key to our defence is to define category roles to understand the importance and priority of each category within the business.
Strategic Category Management - Roles
Destination followed by Preferred categories will be the drivers of frequency growth, developing higher loyalty in Aldi customers and capturing shoppers from the competition.
As proposed by the Category team, in order to drive growth in frequency we could consider a change in Aldi's discount principles which still allows profitability but weights discount in favour of Destination categories.
The below summarises how this approach would need to be taken:
Strategic Category Management - Structure
Maximising sales and profitability
The below discount structure has been created by the Category team as an example of how the discount could be adapted to focus on the key Destination categories where we are seeing most threat from Lidl, and which have the biggest impact on Aldi's ability to attract switching from other retailers.

All options are profitable, and account for the impact on volume where retail may increase.
Lidl have strong performance in the same categories as Aldi – Destination categories which are crucial to a customer’s decision of store
- both retailers are fighting to attract the same customers from the Big 4
Speed to market – following Aldi's range, launching products quickly after we do – they are not so far behind in their range offer as before
- increased incentive for customers to switch, advancing share ahead of Aldi
Aggressively approaching Aldi's supply base for Aldi's NPD
- easier route to market
Focus on taste matching rather than spec matching of product
- lower cost model, increasing commercial threat
Suppliers see Lidl growth rate ahead of Aldi and
choose to work with Lidl as a discounter of choice
- Challenging Aldi's supplier relationships and ability to
execute stronger ranging
Aldi shoppers are increasing their spend with Lidl
Strong improvements in scoring metrics for product quality
and range
- Risk of increased losses if this continues
Summary – Key Threats from Lidl
Summary – Threats from other retailers
It is clear that Lidl are a direct competitor to Aldi, and that this threat needs to be managed in light of recent performance figures. However, there are several reasons to be wary that the threat to Aldi may not be Lidl, but where the greatest opportunity for share gains also lies - the Big 4, Waitrose, and Marks and Spencer.
With most other retailers continuing to report negative performance and lose share, we have to consider how long they will allow Aldi to make gains and what their strategy will be.
Tender selectively for new products
Assess new suppliers thoroughly before disclosing tender details
Agree exclusivity on NPD
Strengthen existing and build further strategic partnerships to remain attractive to key suppliers
Looking Forwards - Growth
Following where Lidl growth was ahead of Aldi growth, for the 2 latest 12 week periods Aldi has returned to lead position in growth. As shown below Lidl appear to have a consistent trend of decline in growth since the end of February 2016. Aldi’s Share of Trade has remained ahead of Lidl despite this challenging time, and the gap is continuing to widen. Switching has also remained in Aldi’s favour for the latest 2 periods.

Looking Forwards - Switching
Lidl’s are seeing a slowing in growth in all measures, with declines in frequency and penetration being the biggest contributors.
They have seen a recent drop in switching gains from Asda, Sainsbury’s and Morrison’s, and are now losing through switching to Aldi and Co-Op.
Looking Forwards - Tiering
It is possible that Lidl’s strong performance in premium own label sales and NPD has been at the expense of standard own label, which holds the majority share of sales but has seen a steady decline in growth where other tiers have maintained performance. This should be a cautionary note to Aldi when considering future NPD strategy, as standard tier should not be ignored.
Looking Forwards - Frequency
Lidl are maintaining growth in basket size, which is one of their biggest areas of opportunity due to the gap between their items per trip (13) and Aldi’s (18). However they are now seeing a decline in frequency. As frequency is predicted to be the key future growth opportunity for Aldi, the decline shown by Lidl, along with a return to switching gains, is promising.
Potential future threats from Lidl:

Several ‘quick wins’ are available where Lidl have significant undertrades vs Aldi
Increase in speed to market in replicating or even bettering our NPD
Building strategic relationships with suppliers where Lidl are currently transactional
Insight from Aldi’s supply base suggests Lidl do not have a faster launch process – there are some instances where it appears suppliers have passed details of Aldi’s NPD programme to Lidl

Opportunities to defend:

Strengthening Aldi’s existing long term partnerships with suppliers and encourage a strategic relationship with only one discounter
Be aggressive in Aldi's NPD programme to widen the gap
Tendering NPD selectively to trusted suppliers
Agreeing exclusivity on new products, recipes and packaging for appropriate timeframes
Challenging Aldi's launch timeframe to allow us to accelerate ahead of Lidl and close the gap with the big 4

Shopper Behaviours – Retailer Preference
Shopper Behaviours – Switching
Aldi shares shoppers with all retailers, however their habits are changing. Whilst this year they are spending more with us and less with Tesco, Asda & Morrisons, they are also spending more with Co-Op, Lidl, Waitrose and M&S. Of these retailers, Co-Op takes the highest spend from Aldi's customers at 5%, and the combined figure is 15.9%, compared to Lidl’s 4.3%. The amount spent in Sainsbury’s has also increased. Aldi's customers still spend the most with Tesco, giving huge opportunity to gain this spend from people who are already shopping in Aldi's stores.
Shopper Behaviours – Retailer Preference
52w/e figures continue to show switching losses to Lidl. However, this returns at 12w/e
Lidl have experienced greater switching gains from premium retailers, highlighting a need to focus on capturing more of this customer demographic
The greatest financial opportunity and potential for loss is the switching from other retailers that Aldi are not achieving because it is going to Lidl.
Switching of course may be due to other factors such as store location, therefore this information may be useful for areas other than the Buying Department
Shopper Behaviours – Switching
Shopper Behaviours – Switching
Aldi Defensive Strategy
Create an aggressive NPD programme across all categories
Challenge launch timeframes to allow for speed of reaction where critical
Assess product launch windows and develop a process for urgent launches
Recognise emergent and exciting markets to grow range breadth
Replicate unique Lidl products where appropriate to minimise switching
Create an aggressive NPD programme across all categories
Challenge launch timeframes to allow for speed of reaction where critical
Assess product launch windows and develop a process for urgent launches
Recognise emergent and exciting markets to grow range breadth
Replicate unique Lidl products where appropriate to minimise switching
Highlights
Aldi own 10 different types of returnable equipment;
Produce trays
Meat trays
Potato shippers
UDPs
1 litre beverage trays
2 litre beverage trays
Euro Pallets
D Pallets
UK Pallets
Plant Trollies
Lidl currently use 8 different types of equipment in store;

Euro Pallets (LPR & CHEP)
D Pallets (LPR & CHEP)
White Pallets (Lidl Pool)
2 litre beverage trays
Plastic UDP
Plant Trollies
Nestable Euro Pallets (Cabka and Pooling Partners)
Lidl SKU’s that are pallet merchandised;

4 SKU’s on Euro Pallets – 2 Additional at the front of the store
48 SKU’s on D Pallets
Merchandising Category Overviews
Fresh Meat
Lidl have focused on their British meat, POS above fresh meat products all include labelling of “We Love British”. POS signs are directly above the Chillers, which are customers eye-level.
Aldi have focused on promoting their British meat, POS above fresh meat products all include labelling of “100% British Farmed”.
POS signs hang from the ceiling above chiller space.
Fresh Meat
Lidl in Republic of Ireland use clear POS signs detailing “100% Irish Beef” and include the Irish tricolour flag, this is the same for all fast moving core range protein products.
Products in Republic of Ireland include a Bord Bia quality assured label or they will display a green “Produced in Ireland” label.
Lidl in Northern Ireland use clear POS signs detailing “100% Northern Irish Beef”. Lidl use “100% Northern Irish” on all fast moving core range proteins such as chicken and eggs, these products do not include the Irish tricolour flag. Other products are Republic of Ireland range with Bord Bia quality assured labelling.

Fresh Meat
Lidl in Scotland use Scottish flag POS behind all price card information for all Scottish products such as meat, eggs, ice cream, bread and cake products.
POS sticker on the floor by the bakery products explaining the price card POS to all customers
Scottish products are clearly visible with a Scottish Ramsay Blue Hunting background. There is also a Scottish Beef logo for all beef products.
Fresh Meat
International Lidl stores continue with the same messaging focusing on developing provenance within the local market. For example Lidl Stores in Spain use the below POS.
Select Beef
“If it’s fresh, it’s Lidl”
“Fresh from our farms”
Fresh Meat
Fresh Poultry, Beef and Lamb are all merchandised in chest chillers.
Total Linear Meterage = 30m
Fresh Meat
Fresh Meat is merchandised in upright chillers, products are merchandised in SRP’s with the exceptions of meat joints and whole chickens which are loose on the shelf.

Specially Selected products are merchandised on the top shelf.
Total Linear Meterage = 38.5m
Fresh Meat
Linerless Label
Silver metallic ink
Gloss varnish
Red spot used on the back of pack
Deluxe range products
Specially Selected products
Reverse printed sleeve
Silver metallic ink
Basic Matt varnish
Pantone Blue
Vacuum packed product
Linerless Label
Gold metallic ink on product title
CMYK logo
Gloss varnish
Gold Foil
Matt Varnish Sleeve
Process Blue
Fresh Meat
Labelled as “British Pork”
Red Tractor label
British flag background
Red Tractor label
Product Count = 120 (mixed cases to be separated)

Unique Products = 25
(products not stocked by Aldi)

Brands Count = 0
Product Count = 146 (mixed cases to be separated)

Unique Products = 49
(products not stocked by Lidl)

Brands Count = 0
Fresh Meat
Source: Kantar Worldpanel data (Key Measures Data Table), 23/05/2015 – 22/05/2016
Lidl currently have a higher % category contribution, the main contributing sub commodities are;
62/01 Fresh Poultry = 0.50%
62/03 Fresh Pork = 0.33%
62/03 Fresh Beef = 0.36%
Market share
% spend growth
Category share
Under (-)/ Over (+) Trade £000s
% Category contribution
52 week ending data
52 week ending data
Market share
% spend growth
Category share
Under (-)/ Over (+) Trade £000s
% Category contribution
Fresh Meat
Source: Kantar Worldpanel data (Key Measures Data Table), 23/05/2015 – 22/05/2016
Lidl currently have a higher % category contribution, the main contributing sub commodities are;
62/01 Fresh Poultry = 0.48%
62/03 Fresh Beef = 0.58%
12 week ending data
Market share
% spend growth
Category share
Under (-)/ Over (+) Trade £000s
% Category contribution
Market share
% spend growth
Category share
Under (-)/ Over (+) Trade £000s
% Category contribution
12 week ending data
Uncooked Bacon, Gammon and Sausages are merchandised on the shelves, this is merchandised with Sliced Meat & Sausages. Most joints are merchandised SRP’s.
Deluxe range products are merchandised on the second and third shelf – which is eye level for the customer.
Each chiller has dividers with some sections including multiple products. This has been updated in their new stores to be merchandised in upright chillers.
Fresh juice now served in store with the produce fixture
UK Concept
In November 2015, Lidl opened a new concept store described as the ‘Lidl of the future’. The store in Rushden, Northamptonshire U.K opened at a fit-out cost of £2 million. At 1,400m, the store is one of the largest in the UK estate, significantly larger than the average Lidl size of 1,000m
Glass frontage allows more light as well bringing energy costs down, which is matched with low level, LED interior lighting

Trolley bays have been moved to the car-park to further open up the entrance area and create feeling of space

Totems advertise fresh bakery in addition to services such as toilets and free parking

Part of a £1.5 billion investment in the U.K over next 3 years ramping up new openings to 50 per annum, all of which are to follow this format
UK Concept
A warm welcome to Lidl at the store entrance

Positive approach to customers enhanced with bicycle shelters, additional navigational signage and Lidl branding on glass
New format is step change with in store bakery a focal point, dedicated 80m preparation room providing 35 SKU’s of fresh product to entice customers entering store and providing real differentiation from competition
A large fresh bakery is encountered immediately on entering the store

Immediate sensory impact both visually and via fresh smell

Much of the bakery items are sold loose to emphasise freshness
UK Concept
Other features include the adoption of a new dark grey colour scheme and POS which helps to portray a more quality-orientated, sophisticated and cleaner image.
UK Concept
The larger size of the store, has allowed it to introduce wider aisles at 2.7m, a larger produce section (40% larger than previous) brought to the front of the store and an expanded BWS offer, all enhanced with open ceilings and the removal of hanging boards.
UK Concept
Produce is displayed on ‘fresh’ branded wood-style crates.
The expanded produce has been moved to the front of the store, next to the bakery
Premium BWS fixture incorporating points based wine guide and a craft ale section

Selected range in crates adding premium feel

Individual bottle divider system ensuring sharp displays with accurate POS location

Self check-out zones and a modification of existing tills allowing customers to pack whilst cashier continues to serve, further evidence of mind-set change to meet customer needs
There are six self-service checkouts, supervised by one member of staff

The addition of self service demonstrates Lidl's desire to embrace customer trends within national markets

UK Concept
Chilled island , similar to what is found in more mainstream UK supermarkets such as Tesco, Sainsbury’s and Waitrose

Move away from chest chillers with vertical chill space finished with premium colours
Expanded space for key growth categories with the focus on fresh; Meat, Fish, Bakery & Produce

These categories are stronger focal points as a result; the bakery creates a feature front of store whilst fish is now located in a stand alone chiller to give focus

Crucially it is the space not the range which has changed to create the new concept

UK Concept
Low level LED and wider aisles improves the shopping experience, while replacing the typical yellow and blue colour scheme with dark wood and black signage gives a more upmarket impression
Lower Specials tables and removal of price board for specials adds to the feeling of space

Wood effect surrounds on NFS tables removing wire ‘cage’ look

High level category headers directing customer journey through store

UK Concept
For legal reasons alcohol cannot be merchandised outside of segregated area – thus none on flexible 4 tier special shelving
International Concepts - Ireland
Ireland – Local brand names offered in addition to category headers – reinforcing provenance message
Increased ‘Just Free’ & whole foods offering.
Non Food given category headers to help facilitate customer mission
Bakery and food to go sections have adopted the lighter wood finish trialled in Switzerland

Additional POS space dedicated throughout store highlighting Irish provenance of key core range commodity groups
International Concepts - Ireland
Latest new format store in Gorey has the addition of ‘Lidl to Go’ range seen elsewhere in Europe, with hot prepared food backfilled adjacent to in store bakery
Additions to bakery include; loaf slicing machine and wall mounted menu detailing all product ingredients, giving additional premium feel

Additional ambient meat section catering for local market in Spain and Spanish islands such as Lidl Majorca
International Concepts - Spain
Current trial of enhanced Health and Beauty fixture focussing on Lidl ‘Cien’ brand
International Concepts - Spain
‘Lidl to go’ range offering hot prepared food. Back filled display adjacent to in store bakery

‘Pick n Mix’ style frozen shell fish self served by customers from chest freezers
International Concepts - Spain
Exterior signage has adopted a ‘softer’ approach whilst consistently inviting customers to comment or contact Lidl via a variety of social media platforms
International Concepts - Spain
International Concepts - France
Bread fixture has addition of plastic covers, with product only accessible via designated scoops rather than by hand to minimise customer handling of product and improve perception of quality
Existing store refurbishment taking place in line with new store format.

Part of a project to invest €450 million over 5 years refurbishing 900 of Lidl’s 1,500 French stores
Trial of lighter wood effect on bakery with a slightly changed bread menu, fixed to pillar behind perspex cover
POS surrounding office door dedicated to celebrity chef endorsement
Additional gondola end wine fixtures in keeping with lighter wood grain as per rest of store
Trial of electronic HD screens in place of paper POS and poster frames

Dual customer tills, allowing customer to pack whilst another is served
International Concepts - Switzerland
Free electric car and bicycle
charging points in car-park

Dedicated merchandising space to Lidl ‘Bio’ range of organic products
Entrance areas in Switzerland have added recycling points in welcome wall for customers, In addition to local picture and welcome message
International Concepts - Switzerland
To do this Lidl will focus on its private labels, benchmarking its ranges against those of Monoprix in France and Migros in Switzerland to make sure that it is offering a quality product at an affordable price
International Benchmarks – Migros
Frederic Fuchs CEO of Lidl France, detailed to Le Monde that Lidl was aiming to change shoppers' perception of the retailer and its products. This has been rolled out at a national conference of French store managers
Founded by Gottleib Duttweiler in 1925 Migros is SWI largest retailer and employer
Founded on selling just 6 basic foodstuffs to households who struggled to have access to markets it has expanded considerably so that now 99% of SWI households either shop at Migros, go on holiday with Hotelplan or bank with Migros

Founded on a concern for health and wellbeing of customers, Migros does not sell alcohol or tobacco
0.5% of turnover is dedicated to social and cultural projects making Migros industry leaders in many areas of CR
If EBIT surpasses 5% retails in stores are lowered

Pioneers of the self scanning system, developed with Polygon in 2009. The aim is to remove the need to queue or to pack in store, which in feedback given highlighted these as the two biggest frustrations of customers

Named ‘Subito’ up to 20% of customers are now users accounting for up to 40% of store turnover, rising to 50% in busy periods depending on location. All target throughput times have been broken in ‘Subito’ stores

International Benchmarks – Migros
Incumbent French discounter with quality focus on both food and non-food
Now part of the Casino Group
International Benchmarks – Monoprix
Store layouts have non-food on entry, focussing on textiles and health & beauty
Fresh produce is a key focus for the business,
Trial of self scanning system in stores
Fresh juice now served in store with the produce fixture
Focus on fresh and provenance is the consistent message throughout the store
International Benchmarks – SuperValu
Trial of self scanning system in stores
Focus on fresh and provenance is the consistent message throughout the store
International Benchmarks – SuperValu
280 local suppliers now part of the SuperValu ‘Food Academy’ programme

Supporting over 1,100 Irish jobs with 85% of participants now claiming they will be recruiting over the next 12 months
Largest grocery share in Ireland at 23% with 2.8% year on year growth

This has predominantly been driven across fresh categories , produce, meat and fish as the market has moved toward higher frequency shops
Business claim that over 70% of products are now sourced or produced in Ireland
1,900 SKU’s spread across 3 tiers; Daily Basics, SuperValu Range & SuperValue Signature Tastes
Lidl UK RDCs
Based in the Midlands area.

Walsall RDC is used as a Non-Food Specials re-work and storage site. Operating a centrally controlled reverse logistics team, co-ordinating recalls and reworks of old stock which is buyer controlled.

100% agency staff.

Lidl UK RDCs
Aisle
picking
Gravity Fed Racking
Freezer Pods
Lidl UK RDCs
Lidl UK RDCs
Lidl Wednesbury RDC

Currently under construction
Possible location for e-commerce FC
Lidl UK RDCs
Schaefer Case picking
In 2012 SSI Schaefer installed an automated picking warehouse system for Lidl in Kirchheim/ Teck, Germany.

As well as installing Schaefer Case Picking (SCP) System, the warehouse includes a high bay racking system with five aisles and around 15,000 pallet storage spaces plus a Schaefer Tray System (STS) with 16,000 storage position on five storage levels.

The system guarantees optimally packed pallets for transporting and unloading goods at the store.

See below link for a video of the exact system Lidl have trialled.

Lidl uses the Schaefer Case Picking System for order picking
Lidl have 3 European hubs run by 3rd parties to consolidate and distribute products:

Valencia (specialist site for produce)
Rotterdam (Port centric – Rotterdam is Europe's largest container port)
Austria
Barcelona (used for inbound consolidation)

Lidl Intralogistics make decisions on which consolidation centres service which RDC’s.

Their RDC network is fully integrated across Europe to allow freight diversion (trunking) opportunities.
Use of Consolidation Centres

All European Suppliers are controlled centrally through Germany. (similar to IB and Aldi UK Buying from IB).

Buying terms are DDP/ DAT into the 3 hubs, then transferred to regional distribution centres across Europe.
Lidl currently contract third party hauliers to trunk goods between the pan European distribution centres (Valencia, Rotterdam and Austria) to local RDCs and between RDC to RDC

This enables Lidl to import smaller amounts whilst maximising their vehicle capacity ensuring minimum amount of haulage on the roads. This also guarantees the best possible freshness of products whilst reaming efficient and environmentally friendly

The example given is of produce sent from Valencia via short sea through the port of Bilbao in North West Spain for distribution across the U.K

Trunking
Produce to Ireland

Lidl buy on a Day 1 for day 3 basis.

Lidl currently use McBurney Transport Group based in Liverpool to complete their Produce to Ireland shipments using the Liverpool to Dublin crossing. As McBurney’s are located so close to the Liverpool port this is the cheapest and most efficient option for them. Suppliers deliver into McBurney for transportation to Lidl using the suppliers transport at the suppliers cost.

They currently receive orders from Lidl by 16:30pm on day 1 and deliver into Ireland from 06:00 on day 3. This leg is charged to the supplier at an average £50 per pallet. All produce is ordered in full pallets.

Produce
Aldi currently deliver Long Life Chill products to Naas and Mitchelstown regions at a cost of £45 per pallet from CML to Naas, £55 per pallet from Oakland's to Naas, £50 per pallet from CML to Mitchelstown and £55 from Oakland's to Mitchelstown.

McBurney’s are currently shipping 10 – 20 loads per day for Lidl. Currently running a cross stock operation only storing Ambient, Produce and Frozen goods.

Aldi currently buy all produce sold within the Irish business through a dedicated Irish Buying Team based in Naas.

The UK Produce buying team are currently exploring the opportunity to improve the quality of produce in Ireland through adopting the buying of Irish sold produce within the UK buying infrastructure. This includes a project with CLD to identify the best supply chain solution.
Returnables
No evidence of Lidl owning returnable equipment in the UK & Ireland, however Lidl are currently renting Teacrate’s from PHS Group for their Fresh Meat and Poultry products, these are equivalent to Aldi’s black crates.
This rental contract includes the washing and issuing of all crates.

Returnables (Lidl)
Lidl currently use 8 different types of equipment in store;

Euro Pallets (LPR & CHEP)
D Pallets (LPR & CHEP)
White Pallets (Lidl Pool)
2 litre beverage trays
Plastic UDP
Plant Trollies
Nestable Euro Pallets (Cabka and Pooling Partners)
PHS issue the crates to suppliers, who then deliver goods into Lidl where the empty trays are stacked to be collected by PHS for washing.

Currently Lidl’s charge to supplier for the rental of crates is £0.40 per crate in comparison to Aldi’s £0.25 per crate.
Lidl currently merchandise all produce in cardboard crates to create a market stall feel.
Non-Food Specials (Logistics)
Logistics and Fleet Information
CSL Logistics - Lidl Case study
One of a number of 3PLs Lidl use for store deliveries and waste collection

Lidl UK do not own any transport fleet themselves

Lidl liveried vehicles are owned by 3rd Parties

All DC to store routing and scheduling is controlled centrally using SAP TMS through their Wimbledon HQ

Backhauling goods from suppliers is also controlled centrally.
Logistics and Supply Chain
Logistics and Supply Chain
Store Distribution (UK)
648 UK stores
126 Ireland stores
655 UK stores
182 Ireland stores
Store Distribution (UK)
Store Distribution (UK)
Logistics and Supply Chain
24 stores within the M25
76 stores within the M25
Greater London
3 new multi temperature sites opening:
Wednesbury (West Birmingham) in 2017
Southampton in Sept 2016
Exeter in 2018
IRE: Charleville, Mullingar, Newbridge, Belfast
Lidl are building 5 new RDC sites in 5 years
Lidl UK RDCs
Lidl Lutterworth RDC
Wellington Parkway, Magna Park, Lutterworth LE17 4XW
Lidl Lutterworth RDC
Wellington Parkway, Magna Park, Lutterworth LE17 4XW
Electronic POD System
Lidl Livingston RDC
Tailend Farm, Deans Industrial Estate, Livingston EH54 8SE
Logistics and Supply Chain
Logistics and Supply Chain
12 stores within the M50
17 stores within the M50
Logistics and Supply Chain
Store Distribution (Southern Ireland)
(2 are replacement RDC’s)
Future RDC Networks
2 planned multi temperature sites:
Cardiff 2016/17
Isle of Sheppey in 2019
Single temperature national distribution: Under review
IRE: Naas & Mitchelstown
All Non-Food Specials products are disposed of if they are damaged, if it’s a low value/ low volume product this will be sent to grand openings or if it’s a high value/ high volume product this will be kept for future on sale dates which will be decided by the buyer.

Single temperature NFS rework / Storage

This is replicated in each country.

Generally there are no textiles or food products that are returned to the National Distribution Centre.

No Gatehouse, Hauliers have to manage themselves in the yard.

Previously Lidl fined suppliers for late delivery. This practice has now stopped.
Lidl have announced plans to relocate this RDC to West Lothian. This facility will be 71,000m2 which is much larger than the current 28,000m2 site. This will fully encompass the new Scottish buying department.
Lidl Northfleet RDC
Fishers Way, Belvedere DA17 6BS
Regional Product site servicing South East England and East Anglia.
Servicing approximately 65 stores.
Lidl RDC Summary
Lidl RDC Summary
Lidl UK RDCs Recruitment
Lidl UK RDCs Recruitment
Lidl have announced plans to invest around €70 million to develop a new Regional Distribution Centre in Spain.
Currently under construction in Alcalá de Henares – Spain this will become the biggest distribution centre in Europe. The 71,800m2 facility will employ 275 workers and supply more than 150 stores in central Spain.

The distribution centre will have a storage area for 10,000 pallets, as well as 12,000 square metres set aside for cold-room storage.

“This will be the biggest distribution platform in the whole of Europe, the most technologically advanced and the most sustainable,” said Javier Suárez, Lidl’s director of expansion and real estate.

Lidl RDCs - European
Transportation and Consolidation
Lidl currently run three Non-Food central distribution centres in Germany:
Berlin
Koblenz
Neckarsulm

They are planning on opening a forth non-food distribution centre in Germany, in the Magna-Park in Langgöns close to Giessen.
Each store has a set day each week for the re-work of specials collections for delivery into the National Distribution Centre in Walsall. The store will receive a pick list for the return of stock which has been decided by the buyer, this is communicated to the store by bulletin.
Lidl currently use 3 different types of Logistics for Non-Food Specials;

Direct deliveries with suppliers from Europe
Delivered Duty Paid
Ex-works using OVIM (Lidl owned company)
Lidl UK RDCs
Lidl combined this with a competition for customers to suggest ‘characters’ which would appear on the packaging of the healthy snacks to be merchandised on the tills. Leveraged via their Facebook page this created additional traffic and interaction between Lidl and the public

Lidl website states that the business has adopted “Front of pack traffic light on all own label products” however following the in store analysis as part of the project there are multiple SKU’s on which this has not been rolled out as yet
Aldi generally score better than Lidl on product availability, and score better on an overall audit score. Obstructions in aisles and hidden products are generally higher in Aldi than in Lidl
Average number of cars in Aldi car parks 60, vs 36 for Lidl, which would suggest the Aldi stores have higher footfall
Key Findings
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